Support Levels

Stock support levels are a key concept in technical analysis when it comes to analyzing stock prices. They are areas where the underlying stock price is likely to find support or pause before going higher.  

Support levels are identified when the stock price tests a certain price level and then rebounds off of it. This is a sign that buyers are stepping in to support the stock at that price level. As the stock price continues to remain above the identified support level, it is likely to increase in value in the future. Support levels can also be used to identify potential buying opportunities. When a stock tests and fails at a support level, it is a sign that the stock may be oversold and could be a good buy. Technical traders will often watch for a stock to bounce off of a support level before entering a buy order. In order to identify potential stocks support levels, technical traders often look at the stock’s price history. They look for times when the stock price has tested a certain level and then rebounded off of it. If a stock tests and fails at a certain price level multiple times. for example if stock A goes from $100 to $80 on a decline and the next time it goes from lets say $90 to $80 and again from $94 to $80, then we would say that the support level would be around $80 since this number seems to be the stop line for the stock from falling lower.

Overall, stock support levels is the area where the price points is likely to find support, meaning the price is likely to maintain or increase in value